Risk Management - 8 questions to challenge the status quo - PwC in ...

What have you done to understand and respond to emerging risk

What are your top 5 emerging risks? In light of recent economic events, the board can no longer say it is unprepared.

An organisation?s risk management is only as good as its board. PwC research shows that top executives are particularly concerned about three key criteria and their own performance in regard to each:

• Defining and shaping strategic objectives;
• Measuring risk management and performance clearly; and
• Aligning and improving risk management culture.

What have you done to assess risk in your supply chain?

• Most supplier reviews focus on price, but less on quality or reputational risk;
• Supply interruptions can have serious repercussions; and
• This is an emerging risk borne of increasing supply chain complexity and inter-dependence

Is your risk management approach tick-box or value-add?

There are many red flags which indicate that your approach to risk management may lack
value:

• Narrow definition of risk management;
• Risk being left solely to internal audit;
• Risk committees without board
• representation;
• Lack of engagement by CEO and CFO;
• Static risk registers; and
• Lack of proper board time devoted to risk.

How is risk management built into how you reward your people?

Do you empower your people? Are you explicit? Do you tell employees what sort of risks you?re willing to take and those you want to avoid. Don?t just assume that they understand.

• Spell things out: define roles and responsibilities and make sure everyone knows what they can and can?t do;
• Provide training: to support the rollout of your risk-appetite framework throughout the business;
• Reward staff: for taking their ideas to the right people rather than going beyond their authority;

Create a learning culture: your employees will be in a better position to learn, if they don?t think that they?ll just be blamed for what they don?t know or get wrong.

What have you done to establish and maintain an appropriate risk management culture?

Many organisations have a piecemeal approach to managing risk. They haven?t understood what kinds of risk or how much risk they should accept, or used this to inform their business strategies or embedded a consistent attitude towards risk-taking.

• Capture information about your major risks and monitor them continuously;
• Analyse others in your sector, learn from best practice and avoid making others?mistakes;
• Look beyond your own industry to identify new risks and opportunities;
• Be proactive. Take calculated risks.

How do you know that risks are well managed?

• Who do you look to tell you about how well risks are really being managed?
• Does Internal Audit have the skills to do the job required?
• What does the assurance map of your business look like?

Are you actively developing your risk management framework?

Do you have some element of these in your organisation?

• Risk awareness training;
• Workshop facilitation experience;
• Timely methodology reviews/
• benchmarking;
• The use of corporate governance as risk mitigation.

How resilient to risk ?failures? are you?

• What would be the impact of multiple significant risks occurring simultaneously?
• Have you got adequate crisis management plans in place? Have they been tested?
• Is your senior team adequately prepared should a crisis occur?

Download Risk Management - 8 questions to challenge the status quo

Source: http://pwc.blogs.com/midlands/2013/03/risk-management-8-questions-to-challenge-the-status-quo.html

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